This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

A Dream Become a Nightmare – And a Plug for ShareSoc

There was a good article in the Daily Telegraph on Sunday (17/5/2015) explaining how Thatcher’s dream of a share owning population has become a nightmare. She tried to create a nation of investors by privatisations and regulatory changes to improve business competition but instead many companies have ended up being sold to foreign buyers.

Even worse there has been a collapse in private share ownership. The reported proportion of UK shares held by individuals has collapsed from 20% in 1994 to 11% today. In addition private shareholders are being stripped of their rights by the proliferation of the use of nominee accounts. The article rightly mentions the ShareSoc campaign against this and quotes us as saying this “fatally undermines your rights as an investor” which is spot on.

There were also some comments in the article from David Nicol of Brewin Dolphin on the need to encourage long term investing, as opposed to short term trading. He suggests reform of the capital gains tax system. It is indeed unfortunate that the system of indexing capital gains was dropped, and it would surely be wise to introduce a lower rate for longer term holdings. The market is becoming more and more speculative and it would be good to incentivise private investors to take a longer term view. With promises made not to raise income tax, there are rumours that the Government might raise capital gains tax rates instead but any changes in this area should encourage share ownership and savings, not deter it surely?

The article calls for Margaret Thatcher’s legacy not to be squandered. It would certainly be good to consider more reforms after her fashion. To read the full Telegraph article by John Ficenec go to: http://www.telegraph.co.uk/finance/11610490/Thatchers-dream-for-UK-investors-has-become-a-nightmare.html

Roger Lawson

One comment
  1. Stephen Burke 18th May 2015 at 10:18 pm

    I think CGT is a bit of a red herring, given that ISAs and SIPPs let you shelter quite large portfolios from it, although it’s true that the loss of indexation is significant for long-term holdings. To me the problem is more that the sort of large, well-known companies that novice investors are likely to favour have done extremely poorly – compare the performance of the FTSE 100 and mid 250 indices over the last 15 years, not to mention three major crises in that period. Pick some random large prominent companies and look at their performance, it’s rarely a good advert for long-term investing. And I sometimes wonder if the big companies that are successful deliberately try to hide from attention – how many people know what Diageo, Unilever, Reckitt Benckiser, WPP or Whitbread do, even though their products are everywhere?

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